"The Standard Oil Company's market share suddenly rose during the1870s, from about 4 percent of the US petroleum industry to fully 90 percent, sparking the fears that gave birth to the antitrustmovement."(Lamoreaux, 2019)1

The Standard Oil Company rise to become a monopoly was achieved throughthe "brutal treatment of competitors" forcing other competing firms to sell out to Standard Oil. Standard Oil began as asmall firm in a highly competitive market, and within ten years had purchased much of the competition. The questions below ask you to compare a competitive market and a monopoly in terms of prices, output and costs to the firms.

1. A)Assume the US petroleum market started as a perfectly competitive market. Draw a market demand and supply curve, and a diagram showing the cost and revenue curves for a representative firm. Briefly describe and explain your diagrams.
2. B)Draw the cost and revenue curves showing the equilibrium output and price after Standard Oil became a monopoly by purchasing the other firms and using their productive capacity. Briefly describe and explain your diagrams.
3. C)Compare the economic outcomes under perfect competition and monopoly.